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Q2. Many corporations do not pay dividends, why are investors willing to by their stock?
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- which one is correct please confirm? QUESTION 21 Finance researcher Myron Gordon argues that ____. a. the clientele effect has no influence on share value b. the existence of transaction costs has no impact on the dividend decision c. dividends reduce uncertainty, and thus the payment of dividends will increase the firm's value d. risk-averse shareholders may prefer some dividends over the promise of future capital gains if the interest rate is expected to decline18. Stock Valuation. A number of publicly traded firms pay no dividends yet investors are willing to buy shares in these firms. How is this possible? Does this violate our basic principle of stock valuation? ExplainWhy might a rational investor invest in the stock of a company that pays no dividend?
- Why do some large corporations forgo dividends?a. What are the risks and rewards of investing in the stock market as compared to the bond market?b. “Because corporations do not actually raise any funds in secondary markets, they are less important to the economy than primary markets.” Comment.Why do firms still do stock dividends and stock splits if it doesn't give shareholders much value anyways?
- 2. Which of the following is a characteristic of preferred stock?A. Give voting rights to its owner.B. It is like annuity.C. Investors cannot force the payment of the dividend.D. Dividends are tax-deductible for the firm as opposed to interest payment.Which one of the following action will not lead to reducing financial risk? Issuing bonus shares Issuing equity shares Issuing preferred stock Reducing dividendIf stock dividends and stock splits don't give shareholders significant value/ amount, why do you think companies decide to still make use of them?
- 1. Suppose many investors are still interested in acquiring the shares of Company ABC after the initial public offering, what kind of Financial market should they go to from whom would they purchase this shares? 2. What would happen if there are no Financial market in the Financial system?3. Why don't corporations pay dividends on shares of treasury stock?Why might a stock dividend or a stock split be of limited value to an investor? What about a stock repurchase? Does it make sense for a corporation to repurchase its own stock?